AUD/USD: Scope for a nosedive as low as the 0.7200 level – Westpac

The US dollar rallied against all G10 currencies Tuesday, wiping out the Australian dollar bounce on the Reserve Bank of Australia proceeding with its QE taper. Looking ahead, economists at Westpac believe the AUD/USD pai may suffer a substantial drop to the 0.7200/50 region.

Tuesday’s sharp reversal leaves the aussie in a bearish state near-term

“One likely source of support is the conversion of historically immense mining dividends, A$18bn or more.” 

“There is also some optimism that by October/November, Australia’s catch-up on vaccination should be starting to result in eased restrictions and thus scope for the economy to rebound.”

“Still, the AUD/USD pair is likely to be prone to setbacks this month, potentially as far as 0.7200/50.”

“Nearer-term, look for a test of the 50-day moving average at 0.7368.”